Tag Archives: financial planning

Personal advocacy as we age is a learned life skill. In these times, when our potential for greater longevity is increasing, this learning should not happen only when we are standing at a moment of crisis at a later stage of life. Perhaps we are learning the lesson in real time, if we are the ones operating as advocates for those older than we are. So how do we best become more proactive about our own protection?

To continue from our last post on this subject by Mark Venning, I want to comment as a now-retired Certified Financial Planner (C.F.P.), and a Professional Retirement Planner (R.F.P.) holder, focusing here on protection within the financial component. My concern is about the individual being self-sufficient. As Mark suggested, it is a good idea, as you find your life stage situation changing, to assess your relationship with your financial planner to make sure you are getting the best advice.

In my view, a good financial planner should be educating their clients as to the various options, appropriate to meet their client goals. The planner who offers only one solution needs to think more about what they are suggesting to clients. The options can vary.

Yet it is you, the client, who must keep your financial planner up to date with changes in your life – such as divorce, death of spouse, new grandchild. This is the only way your planner can come up with possible scenarios for your well-being.

Just as you the individual is ultimately responsible for whatever is reported to the Canada Revenue Agency (CRA) on a tax return, (even if a tax preparer/accountant prepared it); so too, you are ultimately responsible for your own financial realities. No one knows what you need or want better than YOU!

Personal financial advocacy, beyond self-education

The more you are self-educated, the better you will be able to evaluate the worth of the advice your financial planner is giving you. You need to know how your planner is being compensated. If their method of compensation causes concern as you evaluate your planner’s advice, then you may need to consider finding a planner more compatible with your values. For example, know if your planner is “fee-only”, OR “fee-based” in which case they may be licensed to sell securities such as mutual funds, life insurance, stocks and bonds, OR they may be “commission only” OR “fee and commission-based”.

Surprisingly, not everyone who works with a financial planner, whether the planner is a CFP or not, understands the differences in compensation methods. Knowing the differences allows the client to ask important questions. There is no fiduciary standard for “financial planners” in Canada, just a looser “best interests of the client” requirement.

However, beyond self-education you must keep your designated advocates informed of your relationships with a financial planner and other professionals such as the lawyer who drew up your will and powers of attorney. You need to let your Power of Attorney (POA), know what your general attitudes are toward various financial issues such as investment priorities and prohibitions against investing in certain businesses.

Personal advocacy, carried with trust through a POA

Your POA needs to know who your current financial planner is, so that individual can be consulted in the management of your affairs, should you be unable to speak for yourself. The same is true for Executors of your will. Your POA and Executor should also know about the family dynamics, if they are non-family members for example. There are significant numbers of people that have a non-family POA, let alone the fact that, according to a number of reports, about 50 % or more of adult Canadians do not even have a POA.

Personal advocacy is carried with trust through a POA is a huge responsibility. Here is the Government of Canada link to information on the roles and responsibilities of a Power of Attorney. While the document addresses the “older Canadian”, that is an oversight – this is a life learning of increasing importance for people in their younger years, as they will, some day, be asked to be advocates for their parents as well as for themselves down the road.

Financial planning. Financial security. Financial literacy. Financial gerontology. Is it any wonder there is confusion with all this terminology floating in our heads? Not to forget the fusion. As we complete our current series on this subject, maybe it’s not a coincidence that we are now entering the year-end income tax season in Canada.

You can count on a barrage of advertising and news editorials to start any time now, reminding consumers about their retirement plan contributions and other related financial considerations. Turning our concern to personal financials however, should not be a once a year high anxiety moment; nor is it strictly a retirement discussion. Attention to financials issues cuts across our life course.

As a financial planning consultant, Marie says in part one of this series (Nov.30, 2015), personal financial planning is the process of helping individuals and families to use their income and assets to be meet their life goals now and in the future. In that same post, as the researcher and social gerontologist, Suzanne adds that economic and financial issues are important in people’s lives on the journey of aging, but they are also important as public policy issues.

Financial gerontology – public policy issue

Sticking with this term financial gerontology, Marie picks up here by saying that in the macro sense it is an urgent public policy issue. Financial gerontology should become the study of aging and the implementation of measures that will meet the needs of Canadas’ aging demographic. For example, financial, psychological, and general health planning to encompass all citizens from native peoples to immigrant and ethnic communities. The risk is that it will become yet another means of marketing financial products.

The problems associated with an aging demographic are not confined to governments to solve. To be sure, there are roles for all levels of government, but there are also roles for dedicated private groups and for individuals and families. Older adults must also be part of finding their own solutions.

Since we have scarce resources, what is the best use of public monies to meet the unique needs of an aging population? Given the shift and size of aging demographics, it would be very easy to allocate too many scarce resources to satisfying the needs of the aged at the expense of younger people. For example, reducing education funding for younger taxpayers. In consideration of how to determine the best use of these public resources for everyone, would it not be more beneficial that we have a creative inter-generational dialogue?

If financial gerontology is a society-wide, broadly based approach to the costs of aging, then personal financial planning is the specifically focused approach to an individual’s finances – whether they are young or old.

Improving public awareness of how these two professional fields work, (both separately and in fusion), is the challenge, and worth repeating, says Suzanne – financial and economic issues, such as low-income seniors, pension plans and retirement savings are gerontological issues, and they are important personal and public policy issues. Financial security is important for quality of life, and this cuts across our entire life course. However, quality of life goes beyond financial considerations.

Financial & gerontological collaborations

So how do we square the circle around the potential good coming from financial & gerontological collaborations? Let’s go back to the American Institute for Financial Gerontology and their aim to educate a Registered Financial Gerontologist (RFG) on how to “deliver financial solutions in a comprehensive manner with increased knowledge of the older client’s broad based needs.”

There is one significant difference where we say, Suzanne suggests, develop innovative ways on how to better serve “unique needs”, as opposed to deliver solutions to “broad based needs”. Terminology again. When you serve, you determine needs and respond; it is person focused. When you deliver solutions, you provide a product.

So is it possible to effectively combine Financial + Gerontology for older adults; or is it better that two different specialists are required for older client’s broad based needs?
From Marie’s viewpoint as a financial planning consulting – good advisors keep themselves up to date on developments in the financial world, and on general issues of aging, from senior housing to risk prevention in public and private spaces.

But the financial advisor is not in a position to give comprehensive advice about such things as behavioural issues, or health impacts on communities. The gerontologist can offer good background information to the financial advisor, just as the financial planner can offer realistic advice on basic financial issues for the benefit of the gerontologist.

We live in a world of specialization – mainly because there is so much knowledge out there that we cannot be effective if we try to offer services beyond our competency. Keeping up with our own specialties is a full time job!

We are also in the world of collaboration! That is the joy of thinking and writing this series together.
Marie Howes & Suzanne Cook

In part one of Fusion and Confusion of terminology, we presented a basic introduction of our individual professional backgrounds, Marie in the financial planning field and Suzanne in the field of gerontology. One thing in common that we both can say about each of these fields is that while practitioners do work on the front line with individual clients, there are also areas where professional services operate at a macro level. Almost like trying to explain – what is engineering? Likely several ways to drill that down (so to speak).

When it comes to our modern day discussion on aging, longevity, retirement, elder care and so on, there are many intersections where concerns such as health, mobility and financial security can, almost in equal measure, be found mentioned in the same sentence. We left you in our last post, pondering on the equation Financial + Gerontology=? So what do we get?

Financial Gerontology

A little history. According to the American Institute for Financial Gerontology, the term was first established as a discipline in 1988. The AIFG registered program is promoted to give a competitive advantage in the market to professionals that include accountants, lawyers, reverse mortgage lenders and of course financial planners. As one of its three value statements declares, it will help a Registered Financial Gerontologist (RFG) “deliver financial solutions in a comprehensive manner with increased knowledge of the older client’s broad based needs.”

It is from this point that broad terminology can really take the consumer on a ride, and to a certain extent beyond a fusion of jargon, it can lead to consumer confusion. Read a little more widely these days and you will hear newer phrases such as “wealth span planning”. Over the years as Marie observes, in Canada we’ve stuck to clumsy but realistic descriptors like “holistic retirement planning” or “financial and lifestyle retirement planning”.

For another turn of a term you can read on the Simon Fraser University Gerontology MA Careers page, how they describe that the “population bulge will have a big impact on the health care sector and a variety of companies and services as they begin to ‘gerontologize’ products and services.” Isn’t that exactly what is happening here with financial planning services?

Beyond legitimacy for marketers

As a researcher and social gerontologist, Suzanne sees this relatively new field of Financial Gerontology facing some challenges that include improving public awareness and financial education, as well as having those with this designation adhere to a professional code of conduct that puts client interests first as they develop innovative ways to better serve unique needs.

Yet, how more well-informed have consumers of financial planning services become over the last thirty years? From Marie’s point of view, perhaps not much, if at all. And for that matter how well understood is the field of gerontology, not to be confused with geriatrics? It would appear there is still a wide gap in understanding in each respective field, without even trying to couple the two.

As a financial planning consultant, Marie sees that as it stands the use of the term Financial Gerontology, especially in the U.S., is simply another technique for gaining legitimacy for the marketers of financial products – whether those products be insurance or investments.

While it may appear that it combines personal financial planning with gerontological data which is applicable to individuals; ideally and realistically, it is the application of corporate and government financial modelling from the data obtained through the study of gerontology. Its end purpose is to produce useful public policy for the benefit of citizens as they age.

Financial gerontology, if it is to be a useful concept, is the combination of financial considerations at the government level, with data obtained through statistically objective research methods employed by qualified gerontologists and demographers.

Big business of aging

Following on that as Suzanne points to here, during the last decade, issues at the intersection of gerontology and finance have come more into the mainstream since some large financial institutions have hired gerontology experts to better develop tools and resources and hone branding for their aging clientele. More recently, Financial Gerontology has been much discussed following the White House 2015 Conference on Aging in the United States, where policy on financial issues was addressed.

One of the best corporate examples of this fusion, Financial + Gerontology, is Bank of America Merrill Lynch. Cyndi Hutchins, is their director of Financial Gerontology who also created their internal Merrill Lynch Longevity Training Program, developed in partnership with the USC Leonard Davis School of Gerontology.

Yes. This kind of thing is now part of this “gerontologized” era, in the big business of aging. In part three of our series Fusion and Confusion, we will look at some of the gaps in understanding that still exist, some macro and micro aspects, and discuss the potential of realistic collaborations between these two professional areas.

As general public awareness of the evolutionary story of aging demographics has increased over the last ten years, so too has the hyperactive dialogue about the social challenges we may face as a result. Yet the narrative of an aging world has spun new knowledge and innovations, positive attitudes and approaches to living a healthier longer life, and along with all that – new market opportunities.

It has also brought a new hybrid of language and, if not quite a fusion of professional fields of practice, certainly collaborations. One of the benefits of our Planet Longevity panel is that we have created a platform where the expertise and insights we bring from our individual practice areas helps inform each other in this fusion; and ideally helping others, we distill the complexities in the discussion on aging and longevity. Sort out the confusion of terminology if you will.

So where can we start here, to examine where some of this fusion and confusion exists?

Financial + Gerontology = ?

At first reading, never mind murky waters, you might think the fusion of these two terms, financial and gerontology are oceans apart.

How, individually, are these two practice areas defined? What happens if you try to couple these two established professional practices, when taken separately they are still largely not that well understood by the everyday person?

Enter Suzanne Cook, researcher and social gerontologist; and Marie Howes, financial planning consultant. We decided to ask each other first to clear up in uncomplicated terms what each of our professions is about and give you a sense of our particular focus. Let Suzanne start.

As a researcher who studies aging, let me begin by saying that as an interdisciplinary field, gerontology (the study of the biological, psychological, and social aspects of aging and older people) consists of many disciplines such as health, psychology, sociology, education, law and political science, to name a few.

Gerontologists work as practitioners on the front line with individuals. In addition, gerontologists can work within public policy and social planning. Within organizations, they can be involved in program development and evaluation. Gerontologists might also consult and conduct research, as I enjoy doing.

Traditionally, the financial aspects of aging have been a bit on the periphery within the study of aging, a part of gerontology and issues of aging, but not in the forefront. A great example of this is the lack of attention generally paid to later life work and career development among older adults, which is the focus of my research and work in the field.

Regardless, financial and economic issues, such as low-income seniors, pension plans and retirement savings, are gerontological issues, and are important personal and public policy issues. Furthermore, the importance of economic and financial issues in people’s lives on the journey of aging, but also as public policy issues, is further demonstrated through economics and financial management courses being included in many gerontology programs.

Let the fusion begin

This is where the fusion becomes interesting in an aging world. The ripples on the water in this conversation, pool closer when we both speak of the increasing importance of economic and financial issues connected with aging in our society. Marie picks up this linkage by looking at the micro process of personal financial planning.

As a financial planning consultant, my current focus is on challenging current standards for health care funding and delivery methods, and my other concern is about the regulation of financial and investment advisors as related to consumer rights.

Personal financial planning is the process of helping individuals and families to use their income and assets to be meet their life goals now and in the future. The objective is that these goals will be met through the implementation of cash flow management, risk avoidance plans, investment planning, tax strategies and estate planning.

Over the last ten years, personal financial planning has seen innovation in financial products needed by individuals to meet their goals – especially in investment products. For example, Exchange Traded Funds have become a lower cost alternative to mutual funds. But product developers have also added complexity to the product offerings. There has also been a trend toward “fee-based” financial planning, which can blur the distinction between “advice only” and “advice tied to product sales and compensation”.

The gap in public understanding of personal financial planning is in confusing financial planning with investment planning and the purchase of investment products. Many people think that financial planning means buying GICs or mutual funds. That is investment planning and implementation. True personal financial planning does include investment planning and the purchase of investment products, BUT it is a much broader process.

A much broader process indeed. As more of our thoughts turn to forward thinking on aging issues, it will be even more so when you begin to include the equation question Financial + Gerontology = ?

Next in part two of our series Fusion and Confusion, we will look at the current roll out of that equation and share our thoughts on what this means professionally, and how it may sit in the consumer mindset as they make decisions in their future life course.